Consumption economics: your guide to pay-by-the-drink call center pricing
Are you still paying for peak rather than actual usage?
by Heidi Miller, Chief Conversation Officer
For years, service consumers have settled for paying for an predetermined package rather than for actual metered usage. Consumers have shelled out hundreds of dollars per month for cable packages while only watching two or three favorite channels; for car insurance on vehicles driven only occasionally; and for rent at home while on vacation.
But that is changing. Car insurance companies now offer insurance by the mile, and wireless providers are offering no-contract, prepaid phones that track actual minute usage.
Until recently, call centers were stuck with an inflexible hardware purchasing process: enterprise was forced to invest hundreds of thousands or millions of dollars in capital expenditure outlay to launch a new call center. The process usually looked something like this: estimate the maximum capacity needed for the peak period of the year, and then purchase enough infrastructure to accommodate that volume.
Low-volume periods, which account for as much as 80% of the year, would involve much of the costly and rapidly depreciating infrastructure sitting idle. And if the enterprise wanted to expand capacity, the process began again: estimate the new maximum capacity required, purchase, implement, waste, repeat.
Enter the cloud call center model, which promised capex to opex conversion as well as ease of use. However, that old-fashioned pricing model still stubbornly refused to budge. Disappointingly, many cloud vendors still offer pricing models that reflect the former port-based pricing rather than usage-based pricing. In this day and age, it no longer makes sense to price per port for the monthly maximum, even when those ports are not in use.
What you need to know about cloud: the Consumption Economics promise
If you haven’t read about Consumption Economics, read the book here, or check out author Todd Hewlin’s keynote video here to get the basic idea. This book was addressed to hardware vendors rather than to enterprise or consumers, and that perspective is one not often seen outside of industry analyst reports. And the message to vendors is clear: start charging by the drink rather than for a klunky hardware package, or you’ll go the way of the dinosaur.
To save you the read (although it’s really quite a good one), a quick summary of the tenets of consumption economics:
- Stop profiting from capex and shift to the opex model. Your customers no longer want to take on the huge risk of investing in costly infrastructure pieces. So you as the vendor take on that investment risk instead. Rather than relying on profits from selling one big piece of hardware, buy the hardware yourself and sell the service by the drink. Use utilities as a pricing model: charge by kilowatts of actual use.
- Keep it simple Rather than focusing on complexity of features, strive to make your solution so simple a child could purchase and operate it. In this model, accessibility wins.
- Cater to the end user In the world of cloud, users are overriding or circumventing the IT department. With the accessibility of cloud-based solutions, any department can instigate a cloud platform, with or without IT’s approval. Again, keep it simple and keep yourself responsive.
- Low monthly pricing wins The more you can break down the pricing to reduce waste, the better. Sell by the seat or port, but even better by the module or by the feature. And still better, by the feature and by the minute. Eliminate packages and sell by usage.
- Try before you buy The old enterprise technology model almost never allowed for users to experience the product before investing millions in it. By contrast, the cloud consumption model has very low barriers to entry for the customer, so allow prospects to try before they buy in a low-cost, low-risk environment.
- It’s all about the data Hosting a multiple-tenant platform offers vendors a veritable gold mine of detailed user data. Take advantage of that precious data to both drive customer engagement: the best testimonial to a platform is real, live data bout how the system is being used.
Why you should care: apples and oranges
Why do the tenets of consumption economics matter to you and to your call center? Any executive, line of business owner or operations director who is considering transitioning from an on-premise to a cloud-based platform will have to wrangle and compare pricing offers from vendors with vastly different pricing models.
Solutions might be priced per port, per named agent, per minute, or per feature/per minute–and it’s practically impossible to effectively compare apples, oranges, pears and kumquats on the same spreadsheet. And it can be easy to miss the winning kumquat when you’re used to looking at only pears.
So how to spot a true consumption model and the best deal? Here are a few things to look for:
- Look for high implementation fees While this may sound counterintuitive, with effective cloud models, most of the complexity and customization is up front, with the heavy task of converting an older system to the new one.
- Ask about named agents versus concurrent agents “Per agent” can refer to several different pricing models. “Named agents” refers to every registered agent with a unique ID and usually far exceeds actual concurrent agency. “Concurrent agents” refers to the maximum number of agents that are logged on to the system during a given month. Paying by maximum concurrent agency rather than by named agents typically offers cost efficiency because you are paying only for time the agents are actually consuming the service.
- Ask about per-feature pricing Many cloud vendors offer basic packages, similar to a cable provider. For a the most cost-effective consumption model, ask if each platform feature can be purchased separately so that you will only pay for the services you actually use.
- Ask about per-minute pricing For each product/feature, ask what constitutes a minute: logged in agent time? Active call time? And will you be charged by estimated or actual usage minute?
In the new world of consumption economics, the call center no longer has to operate at the whim of inflexible hardware vendors who offer predetermined packages with wasted costs. Today, outsourcers and enterprise alike have the opportunity to purchase contact center services more like a utility: by the actual usage minute. In this by-the-drink world, it’s consumers that are in control of their own destinies–and their own costs.
Spoken Communications provides the leading Call Center as a Service (CCaaS) cloud platform for outsourcers. Each feature is available à la carte and by the minute based on actual usage. For more information, visit www.spoken.com.